Lawsuit: Bank aided $29.5 million Ponzi scheme in Palm Beach County

The quest to recover money for victims of a $29.5 million Ponzi scheme based in Palm Beach County has led to a lawsuit accusing Wachovia Bank of allowing the fraud to flourish.

The bank "provided substantial assistance" that helped Global Bullion Exchange's founder make suspicious transactions, including withdrawing $950,000 in cash in one visit, according to attorneys tasked with getting back investors' lost funds.

"Either they knew what was going on or they weren't monitoring the [bank] accounts the way they should have been," said Daniel Stermer, the attorney who filed the lawsuit against Wells Fargo, which bought Wachovia in 2008. Also named as a defendant is a former employee at a bank branch west of Lake Worth.

Global Bullion Exchange's former owner, Jamie Campany, is serving a 12-year prison sentence after pleading guilty in August 2011 to scamming more than 1,400 customers who thought they were buying precious metals stored at secure locations.

Campany, of Delray Beach, admitted the metals were never bought and that his Lake Worth-based operation was a classic Ponzi scheme, with old clients getting paid with new clients' money.

Wells Fargo spokesperson Michelle Palomino said Friday the bank does not comment on pending litigation. The former employee named in the lawsuit, Corey Daniels, also declined to comment.

Stermer alleges Campany made 287 cash withdrawals totaling nearly $2.5 million from business bank accounts. In 2008 and 2009, Campany made 70 withdrawals of between $8,000 and $9,500, some on the same day or just days apart, according to the lawsuit filed last week in Miami-Dade Circuit Court.

That should have raised red flags at the bank because each transaction of $10,000 or more must be reported to federal authorities under anti-money laundering laws, Stermer said.

Multiple transactions very close to that threshold — what's known as "structuring"— should have been detected, the lawsuit alleges.

In addition, Daniels, who dealt directly with Campany, failed to monitor Campany's accounts and had very little knowledge about what Global Bullion Exchange did, despite repeatedly visiting its offices, Stermer alleges.

Daniels said in a November 2011 deposition that after Campany attempted to deposit two checks totaling $2 million, the bank began investigating. The checks bounced and Wachovia ended its banking relationship with Campany, Daniels said.

Global Bullion Exchange filed the state court equivalent of a Chapter 7 bankruptcy in January 2010 with Stermer assigned to track down assets that could be used to reimburse fraud victims. He has obtained $4.96 million in judgments against individuals and businesses associated with Global Bullion Exchange, but has been able to collect only $100,000.

Investors have filed $17.4 million in claims, and Stermer said that as of this month, he will not be able to return any of their money.

Many investors had their life's savings wiped out. The majority of Global Bullion Exchange's 20 largest clients were senior citizens. One 87-year-old man lost $686,000 before he died.

The company often would run the addresses of potential customers through Google Earth to check the size of their homes. The bigger the home, the more money they would try to squeeze out of the client using high-pressure sales calls, according to Campany.

Court records show that most of the money raised went to the brokers making those phone calls. The company's tax returns for 2007 show that 77 percent of the firm's gross receipts went to brokers.

Thomas Messana, an attorney representing Stermer, said Ponzi schemes cannot happen without the knowing or unknowing assistance of financial institutions.

Wachovia, in particular, should have been on the lookout for potential money laundering, Messana said.

The bank agreed in March 2010 to pay $160 million in fines and penalties to the federal government after being accused of failing to have an effective anti-money laundering policy and allowing drug money to go through the bank.

Charles Intriago, president of the Association of Certified Financial Crime Specialists, said banks make attractive targets for attorneys attempting to recoup money for scammed investors. Recent court cases also may have encouraged efforts to hold banks responsible. Intriago pointed to a $67 million court victory in Miami federal court by a group of Ponzi schemer Scott Rothstein's investors suing TD Bank.

"Banks are a convenient, stationary, brick-and-mortar, deep-pocketed source of recovery for victims of fraud and money laundering and plus they have their reputation on the line," said Intriago, a former federal prosecutor.

Christopher Bruno, Campany's attorney, said Friday that his client has been cooperating with Stermer since December 2009 and remains committed to assisting in recouping investors' money.